With lawmakers away this August, regulators in Washington are doing their best to prove true the old idiom concerning the peril of idle hands, with Department of Education officials continuing to tinker with the so-called gainful employment rule they first issued in March. Under the auspices of addressing the rising tide of student debt, the draft regulation would instead exert capricious oversight of a narrow sector of academia.
The Department of Education’s rule would judge whether an institution can qualify for federal aid by mandating an average rate of repayment of student loans as measured against graduates’ income. Rather than applying to all higher learning, however, the regulation would apply primarily to private sector institutions. Non-degree, vocational programs at community colleges and other public institutions would be excluded, but not career-oriented degree programs at for-profit colleges.
The short-sightedness of such a metric is obvious; this arbitrary ratio may reflect bureaucrats’ prejudices, but not the quality and value of the education offered at schools. This will force private, career-focused institutions to evaluate potential students on their ability to pay back their loans, not on their needs or ability to succeed in their coursework. Thus, the rule unfairly targets populations who require assistance the most, further pushing higher education out of reach for underserved communities.
Similarly, it isolates students from proactive solutions to rising student debt, focusing instead on punishing institutions based on measures over which they have little control. Regulators serious about addressing students’ financial liabilities should be working with schools to inform and empower future graduates, rather than limiting options for learners.
Worse, the Department’s rule exacerbates the quixotic attitude that pervades the American zeitgeist on education today. The notion that one model – pricey four-year degrees, for instance – can address the needs of all higher education consumers ignores the elastic demands of the American economy.
Little attention is also paid to its less obvious costs; consider the years of earnings foregone over the life of a student, especially when data suggest over half of students pursuing a four-year degree actually take six to graduate. The oft-repeated promise of higher wages concurrent with a traditional college degree is true only in a universe where students find work after graduation. This is equally problematic for students who can’t find jobs that utilize their expensive education. Labor force participation rates indicate that this type of chronic underemployment has plagued the American economy far before the start of the recession.
To be sure, the American educational system is one that drives progress and opportunity. But this is because, not in spite of, its ability to respond to changing demands of the labor market and needs of its populations. A system in which bureaucrats get to dictate what kind of education is “best” benefits incumbents but harms students.
Wiping out the ecosystem that has successfully been training workers for vocational jobs would also undermine an already uncertain labor market. With fewer unconventional programs, there will be fewer non-traditional students – full-time workers, learners with dependents and older students, as well as under-represented populations and lower-income earners, will be left without options to pursue professional mobility.
After Fed Chairwoman Janet Yellen failed to offer clarity on the state of the American job market at the recent Federal Reserve conference in Jackson Hole, regulators should be especially reluctant to take moves that could further undermine certainty for workers.
The recession has demanded many workers pursue training to adapt to a contracting and changing labor market. Erecting barriers to mobility is the last thing our belabored economy needs. Indeed, the tepid recovery illustrates that challenges to more stable employment persist. Yellen expressed skepticism over the slack left in the labor force, but it is clear that if the infrastructure surrounding higher education is made even more sclerotic, it will be even more unlikely the employment situation will improve. If regulators are truly concerned about helping students, they should recognize that learners themselves, not bureaucrats, are best-suited to decide what path for higher education befits them.
